Abdollahi et al v. Washington Mutual, FA et al, No. 5:2009cv00743 - Document 43 (N.D. Cal. 2009)
Court Description: ORDER GRANTING 28 Motion to Dismiss by Magistrate Judge Howard R. Lloyd. (hrllc1, COURT STAFF) (Filed on 11/17/2009)
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Abdollahi et al v. Washington Mutual, FA et al Doc. 43 1 ** E-filed November 17, 2009 ** 2 3 4 5 For the Northern District of California United States District Court 6 7 NOT FOR CITATION 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION 11 AKBAR ABDOLLAHI and PARVIN ABDOLLAHI, individuals, 12 Plaintiffs, 13 v. 16 WASHINGTON MUTUAL, FA; WEST COAST FINANCIAL CORPORATION, a California corporation; JP MORGAN CHASE, a New York corporation; and DOES 1–100, inclusive, 17 Defendants. 14 15 18 No. C09-00743 HRL ORDER GRANTING DEFENDANT JPMORGAN’S (1) MOTION TO DISMISS AND (2) REQUEST FOR JUDICIAL NOTICE [Re: Docket Nos. 28, 29] ____________________________________/ 19 Plaintiffs Akbar and Parvin Abdollahi purchased a home in Los Altos, California in 20 November 2006 using an adjustable-rate mortgage (“ARM Note”) from Washington Mutual Bank 21 (“Washington Mutual”). West Coast Financial Corporation (“West Coast”) acted as the broker for 22 the loan. The loan was secured by a deed of trust on the property with Washington Mutual as the 23 beneficiary. In 2008, defendant JPMorgan Chase Bank, N.A. (“JPMorgan”) acquired certain 24 Washington Mutual assets and liabilities from the Federal Deposit Insurance Corporation, 25 including—apparently—the Abdollahis’ note and deed of trust. Plaintiffs later tried to refinance 26 their loan, but were unsuccessful. The Abdollahis then instituted this lawsuit in 2009. 27 Defendant JPMorgan, for itself and as the acquirer of certain Washington Mutual assets and 28 liabilities, now moves to dismiss plaintiffs’ First Amended Complaint (“FAC”) for failure to state a Dockets.Justia.com 1 claim upon which relief may be granted. The Abdollahis failed to file any opposition to the motion 2 or a statement of non-opposition, and they also failed to appear at the hearing. Upon consideration 3 of the matter, the court GRANTS the motion.1 PROCEDURAL HISTORY 4 5 In February 2009, the Abdollahis sued Washington Mutual, West Coast,2 and JPMorgan, 6 pleading twelve claims for relief based on federal and state law. JPMorgan moved to dismiss the 7 complaint. (Docket No. 11.) Although plaintiffs opposed the motion, they did not appear at the 8 motion hearing. This court granted JPMorgan’s motion on June 15, 2009 with leave to amend 9 within ten days. (Docket No. 21.) After plaintiffs failed to meet this deadline, the court ordered them on July 24, 2009 to show For the Northern District of California United States District Court 10 11 cause why it should not dismiss the complaint for failure to prosecute. (Docket No. 22.) On the 12 show cause deadline, plaintiff’s counsel responded that he had “miscalendared” the date to file the 13 amended complaint. (Docket No. 23.) The court then ordered plaintiffs to file their amended 14 complaint as a separate docket entry by August 13, 2009. (Docket No. 25.) Plaintiffs missed this 15 deadline as well, and did not file their First Amended Complaint (“FAC”) until August 26, 2009. 16 (Docket No. 27.) However, they neglected to file any of the exhibits listed in the FAC and further 17 failed to file them even after the court ordered them to do so by October 14, 2009. LEGAL STANDARD 18 On motion, a court may dismiss a complaint for failure to state a claim. Fed. R. Civ. P. 19 20 12(b)(6). The federal rules require that a complaint include a “short and plain statement” showing 21 the plaintiff is entitled to relief. Fed. R. Civ. P. 8(a)(2). The statement must “raise a right to relief 22 above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Yet only 23 plausible claims for relief will survive a motion to dismiss. Ashcroft v. Iqbal, --- U.S. ----, 129 S. 24 Ct. 1937, 1950 (2009). A claim is plausible if its factual content “allows the court to draw the 25 1 26 27 28 Pursuant to 28 U.S.C. § 636(c) and Fed. R. Civ. P. 73, all parties who have appeared in this action have expressly consented that all proceedings may be heard and finally adjudicated by the undersigned. Defendants who have not been served are not deemed “parties” to the action within the rules requiring consent to magistrate judge jurisdiction. See Neals v. Norwood, 59 F.3d 530, 532 (5th Cir. 1995); see also United States v. Real Prop., 135 F.3d 1312, 1317 (9th Cir. 1998). 2 Plaintiffs never served West Coast with the complaint. See Fed. R. Civ. P. 4(m) (allowing 120 days for service). 2 1 reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 1949. A 2 plaintiff does not have to provide detailed facts, but the pleading must include “more than an 3 unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. at 1950. Therefore, simply 4 tracking statutory language or raising general allegations of discrimination is insufficient to properly 5 raise a claim for relief. Twombly, 550 U.S. at 555. DISCUSSION 6 7 A. As an initial matter, JPMorgan requests that this court take judicial notice of documents filed 8 For the Northern District of California United States District Court 9 Request for Judicial Notice with the Santa Clara County Recorder’s office describing the Abdollahis’ deed of trust and 10 associated riders. (Docket No. 29.) “A court may take judicial notice of ‘matters of public record’ 11 without converting a motion to dismiss into a motion for summary judgment,” as long as the facts 12 are not subject to reasonable dispute. Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001); 13 see also Fed. R. Evid. 201(b). These documents, as reproduced from the Recorder’s office, are not 14 subject to reasonable dispute, and the court grants JPMorgan’s request. 15 B. The FAC includes ten federal and state claims, including two federal claims that were not 16 17 Federal Claims present in the original complaint. The court will first address the Abdollahis’ federal claims. 18 1. Claim 1: Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 19 The Abdollahis allege that Washington Mutual and JPMorgan violated TILA because they 20 “failed to disclose the true cost of plaintiffs’ ARM Note in a clear, conspicuous, and accurate 21 manner.” (FAC ¶ 36.) They claim that the ARM Note and the Truth in Lending Disclosure 22 Statement (“TILDS”) that they received when they obtained their loan had contradictory “yearly 23 rate” disclosures—6.625% on the ARM Note and 7.16529% on the TILDS. (FAC ¶ 28.) JPMorgan 24 counters that the claim fails because the suit was brought after the statute of limitations.3 25 3 26 27 28 JPMorgan also asserts it is not liable for any wrongdoing by Washington Mutual because it was not the originating lender on the Abdollahis’ mortgage. However, the Abdollahis allege that JPMorgan voluntarily assumed Washington Mutual’s liabilities in 2008 and is its successor in interest. Because a purchaser can assume the seller’s liabilities where “there is an express or implied agreement of assumption,” see Ray v. Alad Corp., 19 Cal. 3d 22, 28 (1977), the court will assume for the purposes of this motion that JPMorgan could be liable for the federal violations alleged in the FAC. 3 For the Northern District of California United States District Court 1 The statute of limitations for actions brought under TILA is “one year from the occurrence 2 of the violation.” 15 U.S.C. § 1640(e). It is possible for this statute of limitations to equitably toll 3 “until the borrower discovers or had reasonable opportunity to discover the fraud or 4 nondisclosures.” King v. California, 487 F.2d 910, 915 (9th Cir. 1986). Yet the general nature of 5 the transaction, along with disclosure statements and payment schedules, can place plaintiffs “on 6 notice of the possible existence of a claim.” Kay v. Wells Fargo Bank, 247 F.R.D. 572, 578 (N.D. 7 Cal. 2007). 8 The Abdollahis received the mortgage at issue in November 2006, but did not file suit until 9 more than two years later, in February 2009. Nevertheless, the Abdollahis assert that the statute of 10 limitations was tolled “due to defendants’ fraudulent concealment of operative facts” and because 11 they could not have reasonably discovered the violations as they “are not familiar with, and have no 12 expertise with, mortgage transactions.” (FAC ¶ 2.) However, at the time of their mortgage, they 13 received a prominently labeled “Fixed/Adjustable Rate Rider” that provided the “initial fixed 14 interest rate”—6.625%—and how that rate would change over time. (Request for Judicial Notice 15 Ex. 1.) Both plaintiffs initialed each page of this rider and signed the final page. (Id.) This 16 disclosure document placed plaintiffs on notice of a possible claim, especially if the “initial fixed 17 interest rate” was not the same as the “yearly rate” that appeared on the TILDS.4 Furthermore, the 18 Abdollahis plead no facts to support their allegation of fraudulent concealment and do not allege any 19 other action that could have tolled TILA’s statute of limitations. Consequently, they fail to state a 20 TILA claim. 21 2. Claim 2: Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 22 Plaintiffs’ second claim alleges that Washington Mutual and JPMorgan violated RESPA 23 because they failed to provide the Abdollahis with a “Good Faith Estimate” or an “HUD-1 24 Settlement Statement.” (FAC ¶¶ 41–42.) Although plaintiffs do not identify which sections of 25 RESPA apply to these allegations, it appears that they fall under sections 2603 and 2604. 12 U.S.C. 26 § 2603 (uniform settlement statement); § 2604(c) (good faith estimate). However, RESPA does not 27 4 28 The court notes that the annual percentage rate (“APR”) that appears in a TILDS usually is not the same as the interest rate that appears on the associated mortgage note because the APR considers costs such as finance charges and mortgage insurance. See 12 C.F.R. § 226.22 & app. J. 4 For the Northern District of California United States District Court 1 provide for a private right of action for violations of either section. See § 2614 (noting that actions 2 may be brought in federal court for violations of sections 2605, 2607, and 2608); Bloom v. Martin, 3 865 F. Supp. 1377, 1384–85 (N.D. Cal. 1994), aff’d on other grounds, 77 F.3d 318 (9th Cir. 1996) 4 (no private right of action for § 2603); Collins v. FMHA-USDA, 105 F.3d 1366, 1368 (11th Cir. 5 1997) (no private right of action for § 2604). 6 The Abdollahis also allege that Washington Mutual and JPMorgan violated RESPA when 7 they paid West Coast an excessive yield-spread premium. Plaintiffs allege that this payment was 8 “based on costs and fees that were not reasonably related to the services performed” by West Coast. 9 (FAC ¶ 44.) This allegation appears to be a claim under § 2607. § 2607(a)–(b). JPMorgan again 10 argues that this claim is beyond the applicable one-year statute of limitations because the Abdollahis 11 received their mortgage in November 2006. 12 U.S.C. § 2614. The Abdollahis do not plead any 12 facts concerning equitable tolling that are specific to this claim; instead, they rely on the same 13 conclusory statements that they used for their TILA claim. (See FAC ¶ 2.) As a result, plaintiffs 14 have failed to assert any equitable tolling and in turn, have failed to state a RESPA claim. 15 3. Claims 3 and 4: Federal Discrimination Claims 16 Claims three and four allege violations of two federal discrimination statutes: 42 U.S.C. 17 § 3605 (Fair Housing Act) and 15 U.S.C. § 1691 (Equal Credit Opportunity Act). The Abdollahis 18 allege that even though they were “objectively qualified,” the defendants refused to refinance their 19 mortgage on account of their Muslim religion and/or because of their Persian ethnicity. (FAC ¶¶ 50, 20 55.) Yet just as with their original complaint that alleged the same discrimination under different 21 federal statutes, the FAC utterly fails to plead any facts that plausibly suggest that defendants 22 discriminated in any way against the Abdollahis in their attempt to refinance their mortgage. 23 Plaintiffs do not indicate when they tried to refinance their mortgage, how they were “objectively 24 qualified” to refinance, or what defendants did to suggest that any denial was based on 25 impermissible discrimination. Indeed, plaintiffs offer nothing more than conclusory statements that 26 cannot survive a motion to dismiss.5 27 5 28 Even the plaintiffs themselves plead a more likely reason for any such denials: that their “principal loan balance [has] increase[d], thereby limiting plaintiffs’ ability to obtain alternative home loan financing.” (FAC ¶ 33.) 5 1 4. 2 The Abdollahis’ final claim is one for declaratory relief. When there is an “actual 3 controversy” between parties, a federal court may “declare the rights and other legal relations” of 4 the parties. 28 U.S.C. § 2201. The standard used to determine whether there is an actual 5 controversy is the same as the “case or controversy” requirement of the U.S. Constitution. Am. 6 States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir. 1993). Because plaintiffs have failed to state 7 any federal claims for relief, there is no federal case or controversy over which the court may hear 8 their request for declaratory relief. 9 C. For the Northern District of California United States District Court 10 Claim 10: Declaratory Relief State Claims Plaintiffs’ complaint also includes five state claims. As the court has dismissed all of the 11 Abdollahis’ federal claims, it declines to exercise supplemental jurisdiction over their state claims. 12 See 28 U.S.C. § 1367(c). CONCLUSION 13 14 Based on the foregoing, JPMorgan’s motion to dismiss is granted as follows: 15 1. claims. 16 17 2. The court declines to exercise supplemental jurisdiction over plaintiffs’ state law claims and dismisses those claims without prejudice. 18 19 This motion is granted with prejudice as to plaintiffs’ first, second, third, and fourth Judgment shall be entered for defendants and the clerk shall close the file. In addition, a 20 copy of this order will be mailed directly to plaintiffs at the Los Altos property address that appears 21 in the FAC. 22 IT IS SO ORDERED. 23 24 25 Dated: November 17, 2009 HOWARD R. LLOYD UNITED STATES MAGISTRATE JUDGE 26 27 28 6 1 C 09-00743 Notice will be electronically mailed to: 2 John M. Sorich Sung-Min Christopher Yoo Timothy Douglas Thurman Tuyet Thi Tran 3 jsorich@adorno.com cyoo@adorno.com, vdelgado@asands.com tim.thurman@trinlaw.com ttran@adorno.com 4 5 Counsel are responsible for distributing copies of this document to co-counsel who have not registered for e-filing under the court’s CM/ECF program. 6 7 8 9 For the Northern District of California United States District Court 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7
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